|
SCHEDULE 5
|
|
|
CONVENTION BETWEEN CANADA AND THE KING DOM OF DENMARK FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FIS CAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL |
|
|
The Government of Canada and the Government of the
Kingdom of Denmark desiring to conclude a Convention for the
avoidance of double taxation and the prevention of fiscal evasion
with respect to taxes on income and on capital, have agreed as
follows:
|
|
|
I. SCOPE OF THE CONVENTION |
|
|
ARTICLE 1 |
|
|
Persons Covered |
|
|
This Convention shall apply to persons who are residents of
one or both of the Contracting States.
|
|
|
ARTICLE 2 |
|
|
Taxes Covered |
|
|
1. This Convention shall apply to taxes on income and on
capital imposed on behalf of each Contracting State and in the
case of Denmark its political subdivisions and local authorities,
irrespective of the manner in which they are levied.
|
|
|
2. There shall be regarded as taxes on income and on capital
all taxes imposed on total income, on total capital, or on elements
of income or of capital, including taxes on gains from the
alienation of movable or immovable property, as well as taxes on
capital appreciation.
|
|
|
3. The existing taxes to which the Convention shall apply are
in particular:
|
|
|
|
|
|
|
|
|
|
|
|
1. the income tax to the State (indkomstskatten til staten);
|
|
|
2. the municipal income tax (den kommunale indkomstskat);
|
|
|
3. the income tax to the county municipalities (den
amtskommunale indkomstskat);
|
|
|
4. the church tax (kirkeskatten);
|
|
|
5. the tax on dividends (udbytteskatten);
|
|
|
6. the tax on interest (renteskatten);
|
|
|
7. the tax on royalties (royaltyskatten);
|
|
|
8. taxes imposed under the Hydrocarbon Tax Act (skatter i
henhold til kulbrinteskatteloven); and
|
|
|
9. the capital tax to the State (formueskatten til staten),
|
|
|
(hereinafter referred to as ``Danish tax'').
|
|
|
4. The Convention shall apply also to any identical or
substantially similar taxes which are imposed after the date of
signature of the Convention in addition to, or in place of, the
existing taxes. The competent authorities of the Contracting
States shall notify each other of substantial changes which have
been made in their respective taxation laws.
|
|
|
II. DEFINITIONS |
|
|
ARTICLE 3 |
|
|
General Definitions |
|
|
1. For the purposes of this Convention, unless the context
otherwise requires:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. As regards the application of the Convention by a
Contracting State, any term not defined therein shall, unless the
context otherwise requires, have the meaning which it has under
the law of that State for the purposes of the taxes to which the
Convention applies.
|
|
|
ARTICLE 4 |
|
|
Resident |
|
|
1. For the purposes of this Convention, the term ``resident of
a Contracting State'' means any person who, under the laws of
that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar
nature. The term also includes a Contracting State itself, a
political subdivi-sion, a local authority and a statutory body
thereof. The term does not include any person who is liable to tax
in that State in respect only of income from sources in that State.
|
|
|
2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then his status
shall be determined as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Where by reason of the provisions of paragraph 1 a
company is a resident of both Contracting States, then its status
shall be determined as follows:
|
|
|
|
|
|
|
|
|
4. Where by reason of the provisions of paragraph 1 a person
other than an individual or a company is a resident of both
Contracting States, the competent authorities of the Contracting
States shall by mutual agreement endeavour to settle the question
and to determine the mode of application of the Convention to
such person. In the absence of such agreement, such person shall
not be entitled to claim any relief or exemption from tax provided
by the Convention.
|
|
|
ARTICLE 5 |
|
|
Permanent Establishment |
|
|
1. For the purposes of this Convention, the term ``permanent
establishment'' means a fixed place of business through which
the business of an enterprise is wholly or partly carried on.
|
|
|
2. The term ``permanent establishment'' includes especially:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. A building site or construction or installation project
constitutes a permanent establishment only if it lasts more than
twelve months.
|
|
|
4. Notwithstanding the preceding provisions of this Article,
the term ``permanent establishment'' shall be deemed not to
include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Notwithstanding the provisions of paragraphs 1 and 2,
where a person - other than an agent of an independent status to
whom paragraph 6 applies - is acting on behalf of an enterprise
and has, and habitually exercises, in a Contracting State an
authority to conclude contracts on behalf of the enterprise, that
enterprise shall be deemed to have a permanent establishment in
that State in respect of any activities which that person undertakes
for the enterprise unless the activities of such person are limited
to those mentioned in paragraph 4 which, if exercised through a
fixed place of business, would not make this fixed place of
business a permanent establishment under the provisions of that
paragraph.
|
|
|
6. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission
agent or any other agent of an independent status, provided that
such persons are acting in the ordinary course of their business.
|
|
|
7. The fact that a company which is a resident of a Contracting
State controls or is controlled by a company which is a resident
of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a
permanent establishment of the other.
|
|
|
III. TAXATION OF INCOME |
|
|
ARTICLE 6 |
|
|
Income from Immovable Property |
|
|
1. Income derived by a resident of a Contracting State from
immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in
that other State.
|
|
|
2. For the purposes of this Convention, the term ``immovable
property'' shall have the meaning which it has under the law of
the Contracting State in which the property in question is situated
and shall include any option or similar right in respect thereof.
The term shall in any case include property accessory to
immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general
law respecting landed property apply, usufruct of immovable
property, rights to explore for or to exploit mineral deposits,
sources and other natural resources and rights to amounts
computed by reference to the amount or value of production
from such resources; ships and aircraft shall not be regarded as
immovable property.
|
|
|
3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of immovable
property and to income or profits from the alienation of such
property.
|
|
|
4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property of an enterprise and to income
from immovable property used for the performance of
independent personal services.
|
|
|
ARTICLE 7 |
|
|
Business Profits |
|
|
1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business
in the other Contracting State through a permanent establishment
situated therein. If the enterprise carries on or has carried on
business as aforesaid, the profits of the enterprise may be taxed
in the other State but only so much of them as is attributable to
that permanent establishment.
|
|
|
2. Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated
therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected
to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions
and dealing wholly independently with the enterprise of which
it is a permanent establishment.
|
|
|
3. In the determination of the profits of a permanent
establishment, there shall be allowed those deductible expenses
which are incurred for the purposes of the permanent
establishment including executive and general administrative
expenses, whether incurred in the State in which the permanent
establishment is situated or elsewhere.
|
|
|
4. Insofar as it has been customary in a Contracting State to
determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits
of the enterprise to its various parts, nothing in paragraph 2 shall
preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the
method of apportionment adopted shall, however, be such that
the result shall be in accordance with the principles contained in
this Article.
|
|
|
5. No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment
of goods or merchandise for the enterprise.
|
|
|
6. For the purposes of the preceding paragraphs, the profits to
be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and
sufficient reason to the contrary.
|
|
|
7. Where profits include items of income which are dealt with
separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the
provisions of this Article.
|
|
|
ARTICLE 8 |
|
|
Shipping and Air Transport |
|
|
1. Profits derived by an enterprise of a Contracting State from
the operation of ships or aircraft in international traffic shall be
taxable only in that State.
|
|
|
2. Profits derived by an enterprise of a Contracting State from
the use or maintenance of containers (including trailers, barges,
and related equipment for the transport of containers) used for the
transport in international traffic of goods or merchandise shall be
taxable only in that State.
|
|
|
3. Notwithstanding the provisions of paragraphs 1 and 2 and
of Article 7, profits derived from the operation of ships used
principally to transport passengers or goods exclusively between
places in a Contracting State may be taxed in that State.
|
|
|
4. With respect to profits derived by the Danish, Norwegian
and Swedish air transport consortium, known as the
Scandinavian Airlines System (SAS), the provisions of
paragraphs 1 and 2 shall apply only to such part of the profits as
corresponds to the shareholding in the consortium held by Det
Danske Luftfartselskab (DDL), the Danish partner of
Scandinavian Airlines System (SAS).
|
|
|
5. The provisions of paragraphs 1, 2, 3 and 4, shall also apply
to profits referred to in those paragraphs derived by an enterprise
of a Contracting State or by SAS from its participation in a pool,
a joint business or an international operating agency.
|
|
|
ARTICLE 9 |
|
|
Associated Enterprises |
|
|
1. Where
|
|
|
|
|
|
|
|
|
|
|
|
2. Where a Contracting State includes in the income or profits
of an enterprise of that State - and taxes accordingly - income or
profits on which an enterprise of the other Contracting State has
been charged to tax in that other State and the income or profits
so included are income or profits which would have accrued to
the enterprise of the first-mentioned State if the conditions made
between the two enterprises had been those which would have
been made between independent enterprises, then that other State
shall make an appropriate adjustment to the amount of tax
charged therein on that income or those profits. In determining
such adjustment, due regard shall be had to the other provisions
of this Convention.
|
|
|
3. A Contracting State shall not change the income or profits
of an enterprise in the circumstances referred to in paragraph 1
after the expiry of the time limits provided in its national laws
and, in any case, after six years from the end of the year in which
the income or profits which would be subject to such change
would have accrued to an enterprise of that State.
|
|
|
4. The provisions of paragraphs 2 and 3 shall not apply in the
case of fraud, wilful default or neglect.
|
|
|
ARTICLE 10 |
|
|
Dividends |
|
|
1. Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting State may
be taxed in that other State.
|
|
|
2. However, such dividends may also be taxed in the
Contracting State of which the company paying the dividends is
a resident and according to the laws of that State, but if the
beneficial owner of the dividends is a resident of the other
Contracting State, the tax so charged shall not exceed:
|
|
|
|
|
|
|
|
|
|
|
|
The provisions of this paragraph shall not affect the taxation of
the company in respect of the profits out of which the dividends
are paid.
|
|
|
3. The term ``dividends'' as used in this Article means income
from shares, mining shares, founders' shares or other rights, not
being debt-claims, participating in profits, as well as income
which is subjected to the same taxation treatment as income from
shares by the laws of the State of which the company making the
distribution is a resident.
|
|
|
4. The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting
State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs
in that other State independent personal services from a fixed
base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
|
|
|
5. Where a company which is a resident of a Contracting State
derives profits or income from the other Contracting State, that
other State may not impose any tax on the dividends paid by the
company, except insofar as such dividends are paid to a resident
of that other State or insofar as the holding in respect of which the
dividends are paid is effectively connected with a permanent
establishment or a fixed base situated in that other State, nor
subject the company's undistributed profits to a tax on
undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other State.
|
|
|
6. Notwithstanding any provision of this Convention, a
company which is a resident of a Contracting State and which has
a permanent establishment in the other Contracting State shall, in
accordance with the provisions of the law of that other State,
remain subject to the additional tax on companies other than
corporations of that other State, but the rate of such tax shall not
exceed 5 per cent.
|
|
|
ARTICLE 11 |
|
|
Interest |
|
|
1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
|
|
|
2. However, such interest may also be taxed in the Contracting
State in which it arises and according to the laws of that State, but
if the beneficial owner of the interest is a resident of the other
Contracting State, the tax so charged shall not exceed 10 per cent
of the gross amount of the interest.
|
|
|
3. Notwithstanding the provisions of paragraph 2, interest
arising in a Contracting State and paid to a resident of the other
Contacting State who is the beneficial owner thereof shall be
taxable only in that other State to the extent that such interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Notwithstanding the provisions of paragraph 2,
|
|
|
|
|
|
|
|
|
|
|
|
5. The term ``interest'' as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage, and in particular, income from government securities
and income from bonds or debentures, including premiums and
prizes attaching to such securities, bonds or debentures, as well
as income which is subjected to the same taxation treatment as
income from money lent by the laws of the State in which the
income arises. However, the term ``interest'' does not include
income dealt with in Article 10.
|
|
|
6. The provisions of paragraphs 1, 2, 3 and 4 shall not apply
if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the interest arises through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the debt-claim in respect of which the interest is paid is
effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
|
|
|
7. Interest shall be deemed to arise in a Contracting State when
the payer is a resident of that State. Where, however, the person
paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or
a fixed base in connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne by
such permanent establishment or fixed base, then such interest
shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
|
|
|
8. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds, for whatever reason, the
amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention.
|
|
|
ARTICLE 12 |
|
|
Royalties |
|
|
1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State.
|
|
|
2. However, such royalties may also be taxed in the
Contracting State in which they arise and according to the laws
of that State, but if the beneficial owner of the royalties is a
resident of the other Contracting State, the tax so charged shall
not exceed 10 per cent of the gross amount of the royalties.
|
|
|
3. Notwithstanding the provisions of paragraph 2,
|
|
|
|
|
|
|
|
|
arising in a Contracting State and paid to a resident of the other
Contracting State who is the beneficial owner thereof shall be
taxable only in that other State.
|
|
|
4. The term ``royalties'' as used in this Article means payments
of any kind received as a consideration for the use of, or the right
to use, any copyright, patent, trade mark, design or model, plan,
secret formula or process or for the use of, or the right to use,
industrial, commercial or scientific equipment, or for
information concerning industrial, commercial or scientific
experience, and includes payments of any kind in respect of
motion picture films and works on film or videotape or other
means of reproduction for use in connection with television.
|
|
|
5. The provisions of paragraphs 1, 2 and 3 shall not apply if
the beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the royalties arise through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the right or property in respect of which the royalties are paid
is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14,
as the case may be, shall apply.
|
|
|
6. Royalties shall be deemed to arise in a Contracting State
when the payer is a resident of that State. Where, however, the
person paying the royalties, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment or fixed base in connection with which the
obligation to pay the royalties was incurred, and such royalties
are borne by such permanent establishment or fixed base, then
such royalties shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
|
|
|
7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to the
use, right or information for which they are paid, exceeds, for
whatever reason, the amount which would have been agreed
upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions
of this Convention.
|
|
|
ARTICLE 13 |
|
|
Capital Gains |
|
|
1. Gains derived by a resident of a Contracting State from the
alienation of immovable property situated in the other
Contracting State may be taxed in that other State.
|
|
|
2. Gains from the alienation of movable property forming part
of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or of movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services,
including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such a
fixed base may be taxed in that other State.
|
|
|
3. Gains from the alienation of ships or aircraft operated by an
enterprise of a Contracting State in international traffic and
movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in that State.
|
|
|
4. Gains derived directly or indirectly by a resident of a
Contracting State from the alienation of shares of a company
which is a resident of the other Contracting State and of which the
first-mentioned resident owns at least 25 per cent of the value of
the capital stock, or, in the case of Canada, of an interest in a
partnership or trust established under the law of that other State
and of which the first-mentioned resident's total interest was at
least 25 per cent of the value of all such interests, may be taxed
in that other State if at least 50 per cent of the value of the share
or interest, as the case may be, is derived from immovable
property situated in that other State.
|
|
|
5. Gains from the alienation of any property, other than that
referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the
Contracting State of which the alienator is a resident.
|
|
|
6. The provisions of paragraph 5 shall not affect the right of
either of the Contracting States to levy, according to its law, a tax
on gains from the alienation of any property derived by an
individual who is a resident of the other Contracting State and has
been a resident of the first-mentioned State at any time during the
six years immediately preceding the alienation of the property.
|
|
|
ARTICLE 14 |
|
|
Independent Personal Services |
|
|
1. Income derived by an individual who is a resident of a
Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that
State unless he has a fixed base regularly available to him in the
other Contracting State for the purpose of performing his
activities. If he has or had such a fixed base, the income may be
taxed in the other State but only so much of it as is attributable to
that fixed base.
|
|
|
2. The term ``professional services'' includes especially
independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians,
lawyers, engineers, architects, dentists and accountants.
|
|
|
ARTICLE 15 |
|
|
Dependent Personal Services |
|
|
1. Subject to the provisions of Articles 16, 18 and 19, salaries,
wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable
only in that State unless the employment is exercised in the other
Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other
State.
|
|
|
2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting
State shall be taxable only in the first-mentioned State if:
|
|
|
|
|
|
|
|
|
|
|
|
3. Notwithstanding the preceding provisions of this Article,
remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated by an enterprise of a
Contracting State in international traffic may be taxed in that
State.
|
|
|
4. Where a resident of Denmark derives remuneration in
respect of an employment exercised aboard an aircraft operated
in international traffic by the Scandinavian Airlines System
(SAS) consortium, such remuneration shall be taxable only in
Denmark.
|
|
|
ARTICLE 16 |
|
|
Directors' Fees |
|
|
Directors' fees and other similar payments derived by a
resident of a Contracting State in his capacity as a member of the
board of directors or a similar organ of a company which is a
resident of the other Contracting State, may be taxed in that other
State.
|
|
|
ARTICLE 17 |
|
|
Artistes and Sportsmen |
|
|
1. Notwithstanding the provisions of Articles 7, 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsman, from his personal
activities as such exercised in the other Contracting State, may be
taxed in that other State.
|
|
|
2. Where income in respect of personal activities exercised by
an entertainer or a sportsman in his capacity as such accrues not
to the entertainer or sportsman himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the
entertainer or sportsman are exercised.
|
|
|
3. The provisions of paragraph 2 shall not apply if it is
established that neither the entertainer or the sportsman nor
persons related thereto, participate directly or indirectly in the
profits of the person referred to in that paragraph.
|
|
|
ARTICLE 18 |
|
|
Pensions |
|
|
1. Pensions and social security payments, arising in a
Contracting State and paid to a resident of the other Contracting
State shall be taxable only in the State in which they arise.
|
|
|
2. Alimony and other similar payments arising in a
Contracting State and paid to a resident of the other Contracting
State who is subject to tax therein in respect thereof, shall be
taxable only in that other State.
|
|
|
ARTICLE 19 |
|
|
Government Service |
|
|
1. (a) Salaries, wages and other similar remuneration, other
than a pension, paid by a Contracting State or a political
subdivision or a local authority thereof to an individual in respect
of services rendered to that State or subdivision or authority shall
be taxable only in that State.
|
|
|
|
|
|
|
|
|
|
|
|
2. The provisions of Articles 15 and 16 shall apply to salaries,
wages and other similar remuneration in respect of services
rendered in connection with a business carried on by a
Contracting State or a political subdivision or a local authority
thereof.
|
|
|
ARTICLE 20 |
|
|
Students |
|
|
Payments which a student, apprentice or business trainee who
is, or was immediately before visiting a Contracting State, a
resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or
training receives for the purpose of his maintenance, education
or training shall not be taxed in that State, provided that such
payments arise from sources outside that State.
|
|
|
ARTICLE 21 |
|
|
Other Income |
|
|
1. Subject to the provisions of paragraph 2, items of income
of a resident of a Contracting State, wherever arising, not dealt
with in the foregoing Articles of this Convention shall be taxable
only in that State.
|
|
|
2. However, if such income is derived by a resident of a
Contracting State from sources in the other Contracting State,
such income may also be taxed in the State in which it arises, and
according to the law of that State. Where such income is income
from an estate or a trust, other than a trust to which contributions
were deductible, the tax so charged shall, provided that the
income is taxable in the Contracting State in which the beneficial
owner is a resident, not exceed 15 per cent of the gross amount
of the income.
|
|
|
IV. TAXATION OF CAPITAL |
|
|
ARTICLE 22 |
|
|
Capital |
|
|
1. Capital represented by immovable property owned by a
resident of a Contracting State and situated in the other
Contracting State, may be taxed in that other State.
|
|
|
2. Capital represented by movable property forming part of
the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or by movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services,
may be taxed in that other State.
|
|
|
3. Capital represented by ships and aircraft operated by an
enterprise of a Contracting State in international traffic and by
movable property pertaining to the operation of such ships and
aircraft, shall be taxable only in that State.
|
|
|
4. All other elements of capital of a resident of a Contracting
State shall be taxable only in that State.
|
|
|
V. METHODS FOR PREVENTION OF DOUBLE TAXA TION |
|
|
ARTICLE 23 |
|
|
Elimination of Double Taxation |
|
|
1. In the case of Canada, double taxation shall be avoided as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. In the case of Denmark, double taxation shall be avoided as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. For the purposes of this Article, profits, income or gains of
a resident of a Contracting State which may be taxed in the other
Contracting State in accordance with this Convention shall be
deemed to arise from sources in that other State.
|
|
|
VI. SPECIAL PROVISIONS |
|
|
ARTICLE 24 |
|
|
Non-Discrimination |
|
|
1. Nationals of a Contracting State shall not be subjected in the
other Contracting State to any taxation or any requirement
connected therewith, which is other or more burdensome than
the taxation and connected requirements to which nationals of
that other State in the same circumstances are or may be
subjected. This provision shall, notwithstanding the provisions
of Article 1, also apply to individuals who are not residents on
one or both of the Contracting States.
|
|
|
2. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State shall not be less favourably levied in that other State than
the taxation levied on enterprises of that other State carrying on
the same activities. This provision shall not be construed as
obliging a Contracting State to grant to residents of the other
Contracting State any personal allowances, reliefs and
reductions for taxation purposes on account of civil status or
family responsibilities which it grants to its own residents.
|
|
|
3. Except where the provisions of paragraph 1 of Article 9,
paragraph 8 of Article 11, or paragraph 7 of Article 12 apply,
interest, royalties and other disbursements paid by a resident of
a Contracting State to a resident of the other Contracting State
shall, for the purposes of determining the taxable profits of the
first-mentioned resident, be deductible under the same
conditions as if they had been paid to a resident of the
first-mentioned State. Similarly, any debts of a resident of a
Contracting State to a resident of the other Contracting State
shall, for the purposes of determining the taxable capital of the
first-mentioned resident, be deductible under the same
conditions as if they had been contracted to a resident of the
first-mentioned State.
|
|
|
4. The provisions of paragraph 3 shall not affect the operation
of any provision of the taxation laws of a Contracting State:
|
|
|
|
|
|
|
|
|
5. Enterprises of a Contracting State, the capital of which is
wholly or partly owned or controlled, directly or indirectly, by
one or more residents of the other Contracting State, shall not be
subjected in the first-mentioned State to any taxation or any
requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to
which other similar enterprises of the first-mentioned State, the
capital of which is wholly or partly owned or controlled, directly
or indirectly, by one or more residents of a third State, are or may
be subjected.
|
|
|
6. In this Article, the term ``taxation'' means taxes which are
the subject of this Convention.
|
|
|
ARTICLE 25 |
|
|
Mutual Agreement Procedure |
|
|
1. Where a person considers that the actions of one or both of
the Contracting States result or will result for him in taxation not
in accordance with the provisions of this Convention, he may,
irrespective of the remedies provided by the domestic law of
those States, address to the competent authority of the
Contracting State of which he is a resident or, if his case comes
under paragraph 1 of Article 24, to that of the Contracting State
of which he is a national, an application in writing stating the
grounds for claiming the revision of such taxation.
|
|
|
2. The competent authority referred to in paragraph 1 shall
endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at an appropriate solution, to resolve the
case by mutual agreement with the competent authority of the
other Contracting State, with a view to the avoidance of taxation
not in accordance with the Convention.
|
|
|
3. A Contracting State shall not, after the expiry of the time
limits provided in its national laws and, in any case, after six years
from the end of the taxable period in which the income concerned
has accrued, increase the tax base of a resident of either of the
Contracting States by including therein items of income which
have also been charged to tax in the other Contracting State. This
paragraph shall not apply in the case of fraud, wilful default or
neglect.
|
|
|
4. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Convention. They may also consult together for the elimination
of double taxation in cases not provided for in the Convention.
|
|
|
5. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching
an agreement in the sense of the preceding paragraphs.
|
|
|
ARTICLE 26 |
|
|
Exchange of Information |
|
|
1. The competent authorities of the Contracting States shall
exchange such information as is necessary for carrying out the
provisions of this Convention or of the domestic laws of the
Contracting States concerning taxes covered by the Convention
insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by
Article 1. Any information received by a Contracting State shall
be treated as secret in the same manner as information obtained
under the domestic laws of that State and shall be disclosed only
to persons or authorities (including courts and administrative
bodies) involved in the assessment or collection of, the
enforcement in respect of, or the determination of appeals in
relation to, the taxes covered by the Convention. Such persons or
authorities shall use the information only for tax purposes. They
may disclose the information in public court proceedings or in
judicial decisions.
|
|
|
2. In no case shall the provisions of paragraph 1 be construed
so as to impose on a Contracting State the obligation:
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE 27 |
|
|
Activities in Connection with Preliminary Surveys, Exploration or Extraction of Hydrocarbons |
|
|
1. Notwithstanding the provisions of Article 5 and Article 14,
a person who is a resident of a Contracting State and carries on
activities in connection with preliminary surveys, exploration or
extraction of hydrocarbons situated in the other Contracting
State shall be deemed to be carrying on in respect of those
activities a business in that other Contracting State through a
permanent establishment or fixed base situated therein.
|
|
|
2. The provisions or paragraph 1 shall not apply where the
activities are carried on for a period or periods not exceeding 30
days in the aggregate in any 12 month period. However, for the
purpose of this paragraph, activities carried on by an enterprise
related to another enterprise within the meaning of Article 9 shall
be regarded as carried on by the enterprise to which it is related
if the activities in question are substantially the same as those
carried on by the last-mentioned enterprise.
|
|
|
3. Notwithstanding the provisions of paragraphs 1 and 2,
drilling rig activities carried on off-shore constitutes a permanent
establishment only if the activities are carried on for a period or
periods exceeding 90 days in the aggregate in any 12 month
period. However, for the purpose of this paragraph activities
carried on by an enterprise related to another enterprise within the
meaning of Article 9 shall be regarded as carried on by the
enterprise to which it is related if the activities in question are
substantially the same as those carried on by the last-mentioned
enterprise.
|
|
|
4. Notwithstanding the provisions of Article 13, a capital gain
on drilling rigs used for activities mentioned in paragraph 3
which is deemed to be derived by a resident of a Contracting State
when the rig activities cease to be subject to tax in the other
Contracting State shall be exempt from tax in that other State.
|
|
|
ARTICLE 28 |
|
|
Members of Diplomatic Missions and Consular Posts |
|
|
1. Nothing in this Convention shall affect the fiscal privileges
of members of diplomatic mission or consular posts under the
general rules of international law or under the provisions of
special agreements.
|
|
|
2. Notwithstanding Article 4, an individual who is a member
of a diplomatic mission, consular post or permanent mission of
a Contracting State which is situated in the other Contracting
State or in a third State shall be deemed for the purposes of the
Convention to be a resident of the sending State if he is liable in
the sending State to the same obligations in relation to tax on his
total income as are residents of that sending State.
|
|
|
3. The Convention shall not apply to International
Organizations, to organs or officials thereof and to persons who
are members of a diplomatic mission, consular post or permanent
mission of a third State or group of States, being present in a
Contracting State and who are not liable in either Contracting
State to the same obligations in relation to tax on their total
income as are residents thereof.
|
|
|
ARTICLE 29 |
|
|
Territorial Extension |
|
|
1. This Convention may be extended, either in its entirety or
with any necessary modifications to any part of the territory of
the Contracting States which is specifically excluded from the
application of the Convention or to any State or territory for
whose international relations either of the Contracting States is
responsible, which imposes taxes substantially similar in
character to those to which the Convention applies. Any such
extension shall take effect from such date and subject to such
modifications and conditions, including conditions as to
termination, as may be specified and agreed between the
Contracting States in notes to be exchanged through diplomatic
channels or in any other manner in accordance with their
constitutional procedures.
|
|
|
2. Unless otherwise agreed by both Contracting States, the
termination of the Convention by one of them under Article 32
shall also terminate, in the manner provided for in that Article, the
application of the Convention to any part of the territory of the
Contracting States or to any State or territory to which it has been
extended under this Article.
|
|
|
ARTICLE 30 |
|
|
Miscellaneous Rules |
|
|
1. The provisions of this Convention shall not be construed to
restrict in any manner any exclusion, exemption, deduction,
credit or other allowance now or hereafter accorded by the laws
of a Contracting State in the determination of the tax imposed by
that State.
|
|
|
2. Nothing in the Convention shall be construed as preventing
a Contracting State from imposing a tax on amounts included in
the income of a resident of that State with respect to a partnership,
trust or controlled foreign affiliate, in which he has an interest.
|
|
|
3. Notwithstanding the provisions of Article 10, dividends
arising in a Contracting State and paid to an organisation that was
constituted and is operated in the other Contracting State
exclusively to administer or provide benefits under one or more
pension, retirement or other employee benefits plans shall be
exempt from tax in the first-mentioned State provided that:
|
|
|
|
|
|
|
|
|
|
|
|
4. For the purposes of paragraph 3, the term ``approved stock
exchange'' means:
|
|
|
|
|
|
|
|
|
|
|
|
5. For the purposes of paragraph 3 of Article XXII
(Consultation) of the General Agreement on Trade in Services,
the Contracting States agree that, notwithstanding that
paragraph, any dispute between them as to whether a measure
falls within the scope of this Convention may be brought before
the Council for Trade in Services, as provided by that paragraph,
only with the consent of both Contracting States. Any doubt as
to the interpretation of this paragraph shall be resolved under
paragraph 4 of Article 25 or, failing agreement under that
procedure, pursuant to any other procedure agreed to by both
Contracting States.
|
|
|
VII. FINAL PROVISIONS |
|
|
ARTICLE 31 |
|
|
Entry into Force |
|
|
1. The Governments of the Contracting States shall notify to
each other that the constitutional requirements for the entry into
force of this Convention have been complied with.
|
|
|
2. The Convention shall enter into force on the date of the later
of the notifications referred to in paragraph 1 and its provisions
shall have effect:
|
|
|
|
|
|
|
|
|
3. The provisions of the Agreement of 30th September, 1955
between the Government of Canada and the Government of the
Kingdom of Denmark for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to Taxes on
Income, as modified by the Supplementary Convention of 27th
November, 1964 (hereinafter referred to as ``the 1955
Agreement'') shall cease to have effect:
|
|
|
|
|
|
|
|
|
4. Notwithstanding the provisions of paragraph 3, where any
greater relief from tax would have been afforded by the
provisions of the 1955 Agreement, any such provision as
aforesaid shall continue to have effect:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. The Agreement dated 18th June, 1929, between Canada
and Denmark providing for the reciprocal exemption from
income tax on earnings derived from the operation of ships is
terminated on the date on which this Convention enters into
force.
|
|
|
ARTICLE 32 |
|
|
Termination |
|
|
This Convention shall continue in effect indefinitely but either
Contracting State may, on or before June 30 in any calendar year
after the year of its entry into force, give to the other Contracting
State a notice of termination in writing through diplomatic
channels; in such event, the Convention shall cease to have
effect:
|
|
|
|
|
|
|
|
|
IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Convention.
|
|
|
DONE in duplicate at Copenhagen, this 17th day of
September 1997, in the English, French and Danish languages,
each version being equally authentic.
|
|
|
FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE KINGDOM OF DENMARK:
|
|
|
Brian Baker Carsten Koch
|
|
|
PROTOCOL |
|
|
At the moment of signing the Convention for the avoidance
of double taxation and the prevention of fiscal evasion with
respect to taxes on income and on capital between the
Government of Canada and the Government of the Kingdom of
Denmark, the signatories have agreed that the following
provisions shall form an integral part of the Convention:
|
|
|
1. As regards the application of subparagraph (i) of paragraph
1 of Article 3 and of Article 8 of the Convention, the terms
``transport by a ship'' or ``operation of ships'' means the
operation of a ship on a voyage by voyage basis.
|
|
|
2. For the purposes of subparagraph (c) of paragraph 1 of
Article 23 of the Convention, the term ``Denmark'' includes
Greenland. However, notwithstanding the provisions of Article
32 of the Convention, Canada may, on or before June 30 in any
calendar year, give to Denmark notice of termination of the
preceding sentence and in such event the preceding sentence
shall cease to have effect for taxation years beginning on or after
1st January of the calendar year next following that in which the
notice is given.
|
|
|
3. Article 26 of the Convention has been extended to apply to
Greenland.
|
|
|
4. As far as Article 26 is concerned, the terms ``the Kingdom
of Denmark'' and ``Denmark'' shall also apply to Greenland
unless the context otherwise requires.
|
|
|
5. The taxes which in pursuance of this Protocol are the subject
of Article 26 of the Convention shall include the following taxes
which are levied in Greenland: the provincial and communal
income tax, the provincial and communal corporation tax and the
provincial and communal taxes on dividends (indkomst-,
selskabs- og udbytteskatter til landskassen og kommunerne).
|
|
|
6. The term ``competent authority'' means in the case of
Greenland the Greenland Local Government or the authority
which on behalf of the Local Government has been authorized to
handle questions with reference to the Convention.
|
|
|
7. This Protocol shall enter into force on and have effect from
the same date as the Convention.
|
|
|
IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Protocol.
|
|
|
DONE in duplicate at Copenhagen, this 17th day of
September 1997, in the English, French and Danish languages,
each version being equally authentic.
|
|
|
FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE KINGDOM OF DENMARK:
|
|
|
Brian Baker Carsten Koch
|
|